In the ever-confusing and complex world of cryptocurrency, there’s a hidden gem that could bring in a massive amount of money—a rare opportunity that the digital currency realm has never seen before.
For those immersed in traditional finance, the blockchain industry is like uncharted territory, full of both tantalizing profit opportunities and nerve-wracking risks that can make investors both anxious and greedy.
Imagine being on a wild roller coaster ride, where the cryptocurrency market surges and plunges with heart-stopping intensity. While the potential for mind-boggling profits is there, the potential losses can be equally soul-crushing. It’s no wonder that big-shot investors are hesitant to go all-in on crypto. But what if there was a way to ride the crypto wave and reap its rewards while minimizing the risks?
Enter Cryptocurrency ETFs, the perfect middle ground for institutional investors to dive into the crypto world without the constant stress of monitoring Bitcoin’s price and its erratic market behavior. This comprehensive guide is your golden ticket to discovering the best cryptocurrency ETFs available right now and understanding why they could be the ideal match for your investment style.
What Is a Crypto ETF?
A Crypto ETF, or Cryptocurrency Exchange-Traded Fund, is like a package of different cryptocurrencies that you can buy and sell on the stock market. Instead of buying individual cryptocurrencies like Bitcoin or Ethereum, you buy shares of the ETF.
Think of it as buying a basket of different cryptocurrencies all at once, without needing to understand the details of each one. The ETF takes care of managing the cryptocurrencies for you, so you don’t have to worry about things like setting up digital wallets or understanding complicated technology.
When you buy shares of a Crypto ETF, you’re essentially investing in the overall performance of the cryptocurrencies it holds. If the value of the cryptocurrencies in the ETF goes up, the value of your investment goes up too. And if the value goes down, your investment goes down as well.
The great thing about Crypto ETFs is that they are traded on the stock market, just like buying and selling stocks of companies. So, you can easily buy or sell shares of the ETF whenever you want, just like you would with any other investment. Also read How Bitcoin ETF Approval Can Impact the Crypto Market.
In summary, a Crypto ETF is a way for beginners to invest in a diversified bundle of cryptocurrencies without needing to understand all the technical aspects. It makes it easier to get started in the world of cryptocurrency trading.
How to Invest in Cryptocurrency ETFs
Investing in Cryptocurrency ETFs is a simple process, especially if you’re already familiar with traditional ETFs. Here’s a step-by-step guide to help you get started:
- Open a Brokerage Account: The first thing you need to do is open a brokerage account if you don’t have one already. There are many online brokers to choose from like Fidelity or Charles Schwab. They have different features and fees, so pick one that suits you.
- Deposit Funds: Once your account is open, you’ll need to deposit funds into it. This can be done through a bank transfer, wire transfer, or by mailing a check.
- Research Cryptocurrency ETFs: Before you invest, take some time to research the different Cryptocurrency ETFs available. Look into their investment strategy, the cryptocurrencies they track, their fees, and their past performance.
- Place an Order: Once you’ve decided which ETF you want to invest in, you can place an order through your brokerage account.
- Monitor Your Investment: After you’ve made your investment, you’ll own shares in a Cryptocurrency ETF! However, it’s important to keep an eye on your investment and adjust your strategy as needed.
Remember, Bitcoin and other cryptocurrencies are high-risk investments. Just because a reputable financial institution manages an ETF doesn’t guarantee that you’ll make a profit. Also read How to Buy Bitcoin ETFs | 2024.
Best Cryptocurrency ETFs 2024
1. Amplify Transformational Data Sharing ETF (BLOK)
The Amplify Transformational Data Sharing ETF, also known as BLOK, is a leading investment option in the world of cryptocurrencies. Instead of directly investing in cryptocurrencies, BLOK focuses on companies that are actively involved in developing blockchain technologies. This includes well-known players in the crypto industry like Coinbase and MicroStrategy, which is the largest public company with Bitcoin holdings.
BLOK offers a diverse portfolio that captures the potential of blockchain technology. It includes not only established tech giants exploring blockchain but also startups that are disrupting industries with innovative blockchain applications. This ETF is a great choice for investors who want to be part of the broader blockchain ecosystem, not just limited to cryptocurrencies.
2. GrayScale Bitcoin Trust (GBTC)
The Grayscale Bitcoin Trust (GBTC) is a popular investment option for people interested in Bitcoin. It’s not exactly like an ETF, but it works in a similar way. The trust holds a large amount of Bitcoin, and investors can buy shares of the trust to get involved in Bitcoin’s price changes.
The shares of GBTC are traded on a special market, and their price is affected by the value of Bitcoin itself and how many people want to buy or sell the shares. It’s important to know that the price of GBTC shares can sometimes be different from the actual value of Bitcoin, which means they might be more expensive or cheaper.
GBTC can be a good choice for investors who want to get into Bitcoin but don’t want to deal with buying and storing it directly. The Grayscale Bitcoin Trust has been very successful since it started in 2013, making a profit of over 19,000%. It currently has around $18 billion in assets.
3. Siren Nasdaq NexGen Economy ETF (BLCN)
The Siren Nasdaq NexGen Economy ETF (BLCN) is a special type of investment fund in the world of cryptocurrencies. Instead of just focusing on cryptocurrencies themselves, BLCN invests in companies that are involved in developing, researching, supporting, innovating, or using blockchain technology.
The holdings of the Siren Nasdaq NexGen Economy ETF cover various sectors such as technology, finance, and communication services. This means that the ETF provides a diversified approach to investing in blockchain. BLCN is a great option for investors who believe in the potential of blockchain technology to transform industries and want to invest in the companies that are driving this change.
4. Valkyrie Bitcoin Strategy ETF (BTF)
The Valkyrie Bitcoin Strategy ETF, known as BTF, was launched in October 2021 and has become popular in the world of crypto ETFs. This fund is actively managed and aims to invest as much as possible in Bitcoin futures contracts.
In addition to Bitcoin derivatives, the remaining assets of the fund are invested in U.S. government securities, money market funds, and corporate bonds. Like other funds on this list, BTF primarily focuses on investing in Bitcoin futures, allowing investors to benefit from Bitcoin’s price changes without directly owning the cryptocurrency.
To understand BTF, imagine a skilled team of traders who specialize in buying and selling Bitcoin at its highest and lowest points.
The net assets of BTF amount to $32 million USD, and its key assets include Bitcoin (BTC), United States Treasury Bills, and cash in USD.
5. Bitwise 10 Crypto Index Fund (BITW)
The Bitwise 10 Crypto Index Fund is a good option for people who love the excitement and risks of traditional markets. While investing in companies in the blockchain industry is one way to go, if you want real action, then investing directly in cryptocurrencies is where it’s at.
This ETF is great for those who want to have a wide exposure to the crypto market. It tracks the performance of the Bitwise 10 Large Cap Crypto Index, which includes the ten largest cryptocurrencies based on their market value.
The fund holds popular cryptocurrencies like Bitcoin and Ethereum, as well as smaller but promising ones in the crypto world. When you invest in this fund, you’re essentially getting a piece of the top-tier of the crypto market, spread across different cryptocurrencies.
This makes it a good choice for investors who believe in the long-term potential of cryptocurrencies and want to diversify their investments across the leading players.
6. Global X Blockchain & Bitcoin Strategy ETF (BITS)
The Global X Blockchain & Bitcoin Strategy fund, also known as BITS, is an investment fund that combines exposure to the blockchain industry and Bitcoin. It invests in companies involved in the blockchain industry, including hardware manufacturers and software developers.
In addition to that, BITS also offers a Bitcoin futures ETF. This means that a portion of the fund’s assets is allocated to Bitcoin futures contracts, which allows investors to directly benefit from the price movements of Bitcoin.
What makes BITS special is that it provides a blend of blockchain and Bitcoin exposure, making it suitable for investors who want both in their portfolio. For those who prefer less risk, the issuer also offers the Global X Blockchain ETF (BKCH), which doesn’t include Bitcoin futures exposure.
The fund currently has $15 million in net assets, and its key assets under management include the Global X Blockchain ETF and Bitcoin futures.
7. Proshares Bitcoin Strategy ETF (BITO)
The Proshares Bitcoin Strategy ETF, also known as BITO, is one of the oldest and most well-known crypto investment funds on Wall Street. According to Proshares, it is the largest Bitcoin-based ETF in the world.
With over $1 billion in net assets, the BITO fund is a popular choice among investors who want to enter the world of cryptocurrencies. It offers monthly dividend payments and has a low expense ratio of only 0.95%.
Experienced investors have also shown interest in this fund. In December 2023, it was announced that Cathie Wood, CEO of Ark Invest, had acquired a BITO allocation worth around $92 million at the time.
The fund’s net assets currently stand at $1.46 billion USD and its assets under management include Bitcoin futures contracts and United States Treasury Bills.
8. VanEck Bitcoin Strategy ETF (XBTF)
The VanEck Bitcoin Strategy ETF is a way for people to invest in Bitcoin without actually owning it themselves. You don’t have to go through the trouble of buying Bitcoin on a cryptocurrency exchange. The ETF mainly invests in Bitcoin futures contracts, which are agreements to buy or sell Bitcoin at a predetermined price in the future. The goal is to closely follow the performance of Bitcoin.
The fund is managed by VanEck, a well-known company that handles investments. If you believe that Bitcoin will do well and want to benefit from its potential growth, while also having the advantages of an ETF, then the VanEck Bitcoin Strategy ETF could be a good choice for you.
The fund currently has a total value of $43.91 million USD. Its main assets under management are United States Treasury Bills (a type of government bond) and Bitcoin futures contracts.
9. Bitwise Crypto Industry Innovators ETF (BITQ)
The Bitwise Crypto Industry Innovators ETF (BITQ) takes a slightly different approach compared to other ETFs on the list. Instead of focusing on Bitcoin futures contracts, the BITQ fund invests in crypto companies and stocks. This allows investors to participate in the blockchain industry without needing to handle digital assets directly.
The fund was launched in May 2021 and has gained popularity among Wall Street investors. It offers a low expense ratio, starting at just 0.85%. The BITQ fund’s holdings have surged to a net value of over $140 million USD. Some of its top holdings include Marathon Digital Holdings, MicroStrategy, Coinbase Global, and BitFarms.
Is a Crypto or Bitcoin ETF Right for You?
A Crypto or Bitcoin ETF is like a basket of different cryptocurrencies that you can invest in. It’s a way for you to get involved in the world of cryptocurrencies without directly buying and managing individual coins like Bitcoin or Ethereum.
Here are a few reasons why a Crypto ETF might be a good option for you:
- Regulated and Safer: Crypto ETFs are regulated investment products, which means they follow certain rules and guidelines set by financial authorities. This adds a layer of safety and stability compared to investing in individual cryptocurrencies, which can be more volatile and risky.
- Diversification: A Crypto ETF holds a variety of different cryptocurrencies, not just one. This diversification helps spread the risk, so if one cryptocurrency performs poorly, others may perform well and balance it out. It’s like investing in a mix of different coins without having to choose each one individually.
- Easy to Buy and Sell: Crypto ETFs are traded on established stock exchanges, just like regular stocks. This means you can easily buy and sell them through your brokerage account. It’s a more familiar and convenient way to invest compared to dealing with the complexities of buying and storing individual cryptocurrencies.
- Managed by Professionals: When you invest in a Crypto ETF, professional fund managers handle the buying, selling, and management of the underlying cryptocurrencies. You don’t have to worry about making those decisions yourself. They aim to make the best choices to maximize returns for the investors in the ETF.
In summary, a Crypto or Bitcoin ETF is a beginner-friendly option for investing in cryptocurrencies. It provides a regulated and diversified approach to investing, making it potentially safer and easier for you as a beginner. You can buy and sell shares of the ETF through a brokerage account, and the professionals will take care of managing the cryptocurrencies within the ETF.
As with any investment, it’s recommended to consult with a financial advisor or professional who can provide personalized guidance based on your individual financial goals and circumstances. By staying informed, exercising caution, and making well-informed investment choices, investors can potentially capitalize on the opportunities presented by the best cryptocurrency ETFs in 2024.